Life is full of surprises. Some of them are good, like a job promotion, while others are not so good, such as a necessary home repair. Maintaining a budget is the only way to avoid small hiccups on the road from becoming major financial setbacks.
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What’s a Budget?
In simple terms, a budget provides you with the sum of what you owe out, and you need to pay each month against your net income. It’s a way to see what you spend your money on and the amount of debt you owe out.
The Carefree Lifestyle
You work hard each week earning your money and at the end of the day, you want to enjoy some of it. You go to the store and see a cute outfit and buy it. You go online to a women’s clothing site and find a beautiful dress that you simply must have, so you buy it. There’s nothing wrong with having nice things, especially if you work for them. However, there’s a better way of doing it. Saving up for the more expensive items will not only teach you how to save money, but it will also allow you to appreciate them too.
Why You Need a Budget
Since a budget states clearly the amount of debt you owe out, you need this to show you where you spend a large part of your money. Once you know where your money goes, then you can take steps to change your spending habits. For instance, you may have a breakfast place you stop at each morning on the way to the office. The $5.00 you spend is innocent enough, however, if you multiply that small amount by 20 workdays each month, that’s a hundred dollars. major financial setbacks.
Debt is something that a majority of people have. You buy a home, a car and have a couple of credit cards. It’s when you start to rely on credit as a source of income that you suddenly realize you’re in over your head. For example, you receive your paycheck and after paying the bills, you have less than a hundred dollars for the month. So, naturally, you buy food and essentials on your credit cards. The problem is that you really don’t have any money left over that’s yours. If this habit continues it’s only a matter of months before your credit cards reach their limit and you’re basically out of money.
Unfortunately, there is no quick fix to reducing your debt, short of taking on a second job. Depending on the amount and the number of sources of your income, it can take a year or so before you feel any relief. However, you can stop the train wreck, and start today by reeling in your spending. If you don’t accumulate any more debt, you will start to see the amount you owe go down. One way to save money is to start checking prices on clothing, toiletries, and food prior to each purchase. There are a number of online sites that provide discounts for retail stores, restaurants and food items. You should also look for sales. During any off-season, especially with regard to clothing, you can get some sweet deals.
The Positive Effects of Budgeting
A budget makes it easy to pay bills on time, establish savings and put money away for retirement. It also factors in bills that only come along once a year and allows you to set achievable goals for the purchase of a home or a deluxe vacation.
Life is unpredictable. However, if you maintain a budget, the unexpected expenses will be an inconvenience rather than a financial crisis.